AIG - The very Definition of a Brand Crisis

Posted on | March 20, 2009 |

James R. Gregory, CEO CoreBrand

The clever and consistent AIG corporate advertising campaign in recent years, before the collapse of the firm’s credibility, could not and did not outweigh the management decisions that caused the damage. Corporate brand campaigns can be powerful tools to support visionary leaders, but the best campaigns cannot overcome bad business decisions or poor management.

CoreBrand defines a brand crisis when “Familiarity” grows and “Favorability” declines significantly and quickly. A crisis is over when the process reverses itself and “Familiarity” declines while “Favorability” increases..

Brand “Familiarity” grows when a company is in the news - a lot. “Favorability” declines because the news is usually bad. We gauge the severity of the crisis by the amount of “Familiarity” growth vs.”Favorability’s” decline. The data also reveals how much damage is done to the company financially, and how long and how much money will need to be spent to help the company recover - assuming the underlying fundamental problems have been solved.

Negative corporate events that don’t meet the criteria of our definition are usually not a threat to the company’s survival. Companies that do meet this definition need to take prompt action in order to survive. The longer a crisis is allowed to go on the more permanent damage is cause to the corporate brand.

The accompany chart details the changes to AIG’s rankings through 2008.